How To Avoid Becoming the Victim of a Real Estate Scam

By Subodh / April 16, 2014

Real estates are a matter of great concern for both investors and buyers before buying or selling. And in the fragile economic state that the world’s in it is all the more important because of the great deal of money involved. So obviously chances of being duped are higher as there are a number of authorities involved in the process. There is a flow of money at various levels, right from the contractor to the investment agent, who all have their own cuts from the money invested and all of whom can embezzle funds, if not checked by a vigilant eye.

From the buyer’s perspective, real estate is a risky proposition as it not only important to protect oneself against embezzlement, but also to be sure that all documents and files of the property are appropriately handed over, before paying out the money. No doubt, real estate is one of the most sensitive areas for frauds and scams which might be lurking around the corner. Hence, it is important to be aware of a few ways to prevent yourself from being scammed.

Avoid Becoming the Victim of a Real Estate Scam

Check the Legality and Credentials of the Agent

Deals in the real estate business take place through brokers most of the time. They are the agents which act as an interface between the potential buyers and sellers, cutting out a fat commission for themselves in the process. It is very important to check the authenticity and the legality of the agent or organization before pledging money, and if possible, to eliminate the middlemen entirely. Maximum scams arise because of these middlemen due to fraud trading, fake property selling, embezzlement and illegal operation activity. In some cases, they are the sole medium of communication between the buyer and seller. As a result, they have the freedom to twist quotes and churn out more money from their client than what they are entitled to. In this way, the client ends up getting duped and there is not much he can do since this cut is not generally accounted for in the deal. Thus, it is very important to deal with a trusted and legitimate source.

Avoid Online Medium of Trading

In the internet savvy world of today, everything can be ordered, borrowed or purchased online. Same is the case with real estates. Agents and organizations have established their “shops” online, through which they attract customers and conduct transactions. Many unscrupulous agents also use this medium to send out fraudulent schemes, investment benefits or online discounts in order to lure customer, while they themselves stay behind the veil of the internet. People should be aware of such scams plaguing the internet and verify the authenticity of the source before transferring money or making transactions. Meeting and deciding physically gives a sense of security and proper trust in the agent. Also, online transfer scheme should be avoided as far as possible. Cash payment or other safer financial instruments should be used so as to prevent getting duped.

Legal Awareness

It is very important to be aware of the legalities and the authorities which are involved in the process and the government rules regarding the same. As many levels of clearances are solicited and many people are involved, a proper knowledge of the legal formalities would help greatly in preventing paying more than the worth of the property to associated middlemen and agencies. Also, it would help to save money that the investment agency might ask you to pay for some undisclosed transactions. Better awareness means better safeguarding of one’s hard earned money.

Legal Action Whenever Necessary

Though most people are reluctant to exercise this option, but it is greatly helpful in reducing the losses in case of any scam or preventing a scam from taking place at all. Proper legal action should be taken and relevant people should be approached if at any point the question arises about the legitimacy of the firm, problems of payment issues or when you feel that the deal is a scam. The laws and rules governing real estate provide for protection of the interest of the investors. So invoking them at the right time and with proper cause can help you safeguard your investment and also prevent future scams of that sort.

Thus, it is very important to be vigilant while buying or dealing in real estates. Attending programs and seminars on real estates can open the minds and help in being more careful before investing. A better awareness can really prevent one from getting scammed.